China Road and Bridge Corporation v Welt Machinenen Engineering Limited (Civil Appeal 52 of 2017) [2019] UGCA 2105 (21 June 2019)

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA CIVIL APPEAL No. 52 OF 2OI7

(Appeal from the judgment of Wolayo J, in High Court (at Soroti) Civfl Suir No. 16 of 2Ot4)

ICORAM: OWINY - DOLLO, DCJ; CHEBORION BARISHAKI & TUHAISE, JJ. A.l

CHINA ROAD & BRIDGE CORPORATION APPELLANT

#### 10 VERSUS

WELT MACHINENEN ENGINEERING LTD RESPONDENT

# IUDGMENT PE. SUINI-DOtLO. DC. I.

#### Introduction

'Ihis Appeal lies from the decision of WotayoJ. in Soroti FIigh Court Civil suit No. 16 of 2014; in which the Court heard the matter as <sup>a</sup> Court of first instance.

## <sup>20</sup> Background

The Respondent herein had filed the aforementioned suit against the Appellant herein and others; seeking a number of orders inclusive of special, general, aggravated, and exemplary damages. 'l-he claim against the Appellant was founded on the tort of trespass; alleging that the Appellant had wrongfully entered onto and taken possession of a certain rock known as Kamusalaba, situated in the Nakapiripirit District, in Karamoja sub region. The Respondent further alleged that at the said Kamusalaba rock, the Appellant unlawfully carried out excavation and mining of granite

stones for which the Respondent claimed it had the exclusive preserve to mine, under a licence granted to it by the Ministry of Energy and Mineral Development.

5 The Appellant however, in its written statement of defence, denied the allegations made against it by the Respondent; contending that it had not at all infringed on any rights of the Respondent in its (Appellant's) exploitation of the suit rock. It contended further that it had duly obtained the authority of the Nakapiripirit District Local adtnirtis tra tiun [o excavaLe building slones lrom the suit rock; and it uscd thc stoncs so cxcavatcd, on the construction of Moroto - Nakapiripirit road, which it had beeu contracted Lo do. The Appellant also raised a counterclaim against the Respondent in the suit; accusing the Respondent of fraud amongst other things. 10

At the stage of the joint scheduling conference of the suit, the parties wel'e on comnlorl ground or) the Iolluwirrg IacLs; which l"hey spelt out in the Joint Scheduling Memorandum. First, was that the Respondent held two licences - No. 1194 and No. 1I95 - for it to mine granite stones. Second, was that the Appellant was in Possession of the suit rock with the authority of the Nakapiripirit District Local Government. Third, was that the Appellant was, at thc time of the scheduling conference, in possession of the suit rock; and carrying out, therein, mining,/quarrying activities. 15 20

The parties proposed the following issues for determination by Court:

<sup>25</sup> I .t Whether licences rock. the for Plainttff is the lawful owner of exclusive/sole mining of granite the on location the suit

- $2.$ Whether the $1<sup>st</sup>$ Defendant is trespassing/infringing on the $\tilde{M}^{\ast}$ *Plaintiff's rights.* - Whether the $2^{nd}$ Defendant and the $3^{rd}$ Party had the capacity $\mathfrak{Z}$ . to enter into the agreement to operate on Kamusalaba rock land with the 1<sup>st</sup> Defendant. - Whether the $2^{nd}$ Defendant has/owns the reversionary interest $4.$ in the said Kamusalaba rock.

Whether the $3^{rd}$ Party had a duty to conduct a due diligence on 5. ownership of the rock; and if so, whether the duty was breached.

- 6. Whether the $1^{st}$ Defendant was entitled to its counter claim. - 7. Whether the $3<sup>rd</sup>$ Defendant is liable for acts and/or omissions of the $1^{st}$ Defendant in sourcing of materials for the construction of the permanent works on the Moroto -*Nakapiripirit road,* - Whether the $3^{rd}$ Defendant should be struck of the record. 8. - 9. *What are the remedies available to the parties?*

The parties then filed witness statements, which formed the bases of cross-examinations of the witnesses on either side summoned for that purpose. In the amended plaint, the $3<sup>rd</sup>$ Defendant was 20 dropped as a party to the suit; and thereafter ceased any further participation in the suit. After the cross examinations, Counsel for either party filed written submissions in support of their respective cases. Owing to the 3<sup>rd</sup> Defendant having been dropped from the suit as stated above, the learned trial judge, in framing the issues 25 for determination by Court, left out issues Nos. 5, 7, and 8, from those that had been agreed on and proposed by the parties; thereby

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reducing the issues for determination by Court comprised in grounds only. slx

In her judgment, she allowed the suit in part only; and made the following orders:

51 The 1" Defendant shall render an account of the quantity of aggregates procured from Kamusalaba rock to the Attorney General and pay the Government its monetary value within reasonable time and not later than jO days from the date of this order.

2. A permanent injunction shall issue restraining the 1"' Defendant from mining Kamusalaba rock-

- 3. The Commissioner Geological Survey and Mines to investigate and prosecute future breaches of the Mining Act 2003. - 4. The order dated 9'n September 20 1 5 attaching the 1" Defendant's payment of 8.5 Billion/ held by UNRA is hereby vacated. - 15 5. As the Plaintiff was successful on three issues while the Defendant was successful on two issues, and because ir is the Platntiff who brought this action that exposed the irregularities by the 1" defendant, the 1" Defendant shall pay % of the taxed costs to the Plaintiff.

2a Being aggrieved by the judgment and orders of the learned trial judge, the 1'' Defendant has appealed to this Court. The Respondent has also cross-appealed against certain aspects of the judgment and orders of the learned trial judge. The Appellant has listed the following grounds as the basis of the appeal:

- The learned trial judge erred in law when she held that the Respondent was the lawful owner of the location licenses for exclusive/sole mining of granite on the suit rock. I - <sup>7</sup> The learned trial judge erred in law and fact when she held that the 2^' Defendant and the 3'd party did not have the capacity to enter into an agreement with the Appellant to enter, access and use Kamusalaba rock land.

- <sup>3</sup> The learned trial judge erred in law and fact when she held that there was no fraud in the process of applying for the location licenses and imputed reference to village as a mistake yet it was pleaded by the Respondent. - The learned trial judge erred in law and fact by disallowing the counter claim that the Plaintiff was fraudulent when he added the word village to Atumtaok rock for his application, to read Atamtaok village; and used the same application to pyocess two licences for Kamusalaba and Atumtaok rock; and continued to process both licences even after being warned by the CAO of the activittes of the Appellant on the suit rock. s4 10 - 5. The learned trial judge erred in law and fact when she found and ordered that the Appellant pays the monetary value of the quantity of aggregate proured from Kamusalaba rock. - 15 6. The learned trial judge erred tn law and fact when she awarded the Respondent half the taxed bill of costs for alleged exposing a breach yet the Respondent was suing the Appellant for his own gatn.

The Respondent's cross-appeal is based on the following grounds; namely:

- 1. The learned trial judge erred when she found that the Appellant's mining operations at Kamusalaba were not within the Respondent's licensed area. 20 - The learned trial judge erred in fact when she found that the Appellant had not infringed on the Respondent's mineral rights. 2 - 253 The learned trial judge erred in fact and in law in her assessment of special damages in the circumstances of the case.

## Belreseulat!q4

At the hearing of the appeal, the Appellant was represented by Counsel George Omunyokol and Paul Ekochu, instructed by M/s GP Advocates (formerly Omunyokol & Co. Advocates). They appeared jointly with Counsel Rachel Nyakecho, instructed by U/s Omara

Atubo & Co. Advocates. The Respondent was represented by Counsel Terence Kavuma, instructed by M/s Kabayiza, Kavuma, Mugerwa, & Ali, Advocates. Counsel on both sides filed written arguments; which, with the acceptance of Court, they adopted at the hearing as their respective submissions in the appeal and cross appeal.

#### The case for the Aooellant

It was argued by Counsel for the Appellant that all the six grounds of appeal rotate around the core issue of whether rocks are minerals as was found by the learned trial judge in her judgment; hence, whether the Appellant ought to have obtained a mining licence before exploiting them by converting them into aggregates for road construction. Counsel argued that the learned trial judge rclicd on thc provisions of Scction 2 of thc Mining Act; and yet the Mining Act does not override the provisions of Article 244 (5) of the 10 15

Constitution, which explicitly excludes rocks or stones used for building purposes from the categorisation of minerals. Counsel submitted further that although Article 244 (6) of the

Constitution mandates Parliament to put in place legislation regulating the commercial exploitation of building materials, it has not yet done so. In sum, it was Counsel's submission that the Appellant did not require any mining licence to extract the rocks in issue; and accordingly, it had done no wrong to exploit the rocks in issue. It was Counsel's contention, basing on the submission above, that the issuance of Location Licences 1194 and 1195, by the Ministry of Energy, to the Respondent to exploit the rocks in issue, was done on the mistaken belief that rocks are minerals. Counsel then concluded that following from this, the learned trial judge 20 25

should have found that the Respondent has no locus to bring <sup>a</sup> claim against the Appellant.

Counsel also faulted the learned trial judge for finding that Location Licences 1194, and 1I95 were lawfully issued; whereas there was clear evidence of fraud committed by the Respondent in processing the licences. Such fraud included the Respondent later adding the word 'village' in its application to cover two separate rocks of Atumtaok, and Kamusalaba. It also included the fact that the Chief Administrative Officer of Nakapiripirit District had warned the Respondent of the Appellant's activities on the Kamusalaba rock; but this was ignored by the Respondent when it processed the two Location licences in issue. Accordingly then, Connsel argued, Licences Nos. 1194 and 1195 were invalid, and illegal; hence, void ab inrtio. Owing to this issue of fraud, the learned trial judge ought to have nullified the licences.

Following from the sum of the submissions above, Counsel contended that the learned trial judge erred in ordering that the Appellant has to pay the Government of Uganda the monetary value of the quantity of aggregates it had exploited from the suit rock. Similarly, Counsel faulted the learned trial judge for awarding half of the costs to the Respondent who, on the evidence and law, Counsel contended, had no locus standi to bring the suit against the Appellant. Counsel then prayed that this Court be pleased to allow the appeal, set aside the judgment and orders of the lower Court, and award costs to the Appellant here and in the Court below.

### The case for the Respondent

Counsel for the Respondent, on the other hand, made his submissions in the converse to that of learned Counsel for the Appellant; both on the law and facts. He defended the learned trial

judge's findings and conclusions. He addressed Court specifically on each of the six grounds raised by the Appellant in support of the appeal, as follows:

I The learned trial judge erred in law when she held that Respondent was the lawful owner of the location licences exclusive/sole mining iof granite on the suit rock. the <sup>5</sup> for

10 15 Counsel submitted that the two applications by the Respondent for location licences. The location licenses were particularised by coordinates for the locations; and these are in evidence. The location licenses were gazetted as required by law; and a copy of the Gazette is in evidence. The location licences were only granted to the Respondent upon Rhino United Agencies Ltd., having surrendered part of its exploration license to the Respondent, and this covered the suit area. This exploration license had been grantcd to Rhino United Agencies Ltd., long before the Appellants took possession of the suit rock and commenced exploiting it. Second, Counsel argued that since at the conferencing stage, as is manifested in the joint scheduling memorandum, the parties agreed that the Respondent is the holder of the suit location licenses.

20 2t. The learned trial judge erred in law and fact when she held that the 2" Defendant and the Third Party did not have the capacity to enter into an agreement with the Appellant to enter, access, and use Kamusalaba Rock land.

25 30 In support of the trial judge's finding, Counsel submitted that it was not in contest that the substances (stones) the Appellant excavated from the suit area was granite; and this position was bolstered by the submissions of the Appellant's learned Counsel at the trial. The position held by the Appellant was only that granite is not a nrineral as by law. Counsel pointed out that Article 244 (5) of the Constitution delines what a mineral is. Counsel then contended

that the Appellant did not adduce any evidence to show that granite is a 'stone commonly used for building'; and so exclude it from the categorisation of minerals. Since granite is a mineral, Counsel argued, no other person or institution other than the Ministry of Energy could grant anyone the rights to extract it. Accordingly then, the authority over the suit rocks, granted to the Appellant by the Nakapiripirit District Local Government, was of no legal effect.

<sup>3</sup> The learned trial judge erred in law and fact when she held that there was no fraud in the process of applying for the location licenses and imputed reference to village as a mistake yet it was pleaded by the Respondent.

Counsel contested this allegation of fraud, pointing out that the Appellant failed to bring evidence prove that the Respondent had obtained the two location licenses on the alleged claim by Koriang Aporole, Loyok Padule Raphael, Akol Charles, Lokeris Peter, Longole Loyor, and Lokol Joseph, were the customary owners of the suit land. Counsel submitted further that the Respondent is a limited Iiability whose claim would not be premised on whatever customary proprietorship the named persons might have on the land. Its claim to the suit land is instead founded on the two licences it had

obtained from relevant authorities. 20

Similarly, Counsel contested the allegation that the Respondent had obtained the two licenses through the influence of Hon Peter Lokeris; submitting that the Appellant never adduced any evidence in Court in that regard. He submitted further that in any case, Hon Peter Lokeris is not involved in the management of the Respondent; hence, his actions should not be attributed to the Respondent. Counsel pointed out that the initial license for the exploration of an area that included the suit area had been issued to Rhino United

Agencies Ltd., in the first instance; and this was before the Appellant had shown any interest in the suit rocks.

Counsel submitted that because the Respondent obtained <sup>a</sup> surrender of the the land covering the suit rocks from Rhino United Agencies Ltd., an allegation of fraud could stand against the Respondent, since the roots of its two licences trace back to Rhino United Agencies Ltd., the original holder of the license that predated the Appellant's involvement with the suit land. It was Counsel's further contention that even if the Respondent had obtained the licenses with knowledge of the Appellant's activities on the suit rock, it would not have amounted to fraud since the Appellant's possession and activities were illegal. Similarly, defiance of the Chief Administration Officer's warning against the Respondent's procurement of the license, owing to the Appellant's activities in the suit area, was not an act of fraud since the Appellant was wrongfully on the land.

4. The learned trial judge erred in law and fact by disallowing the counter claim that the Plaintiff was fraudulent when it added the word 'village' to Atumtaok rock for its application to read 'Atumtaok village'; and used the same application to process two licences for Kamusalaba and Atumtaok rock, and continued to process both licences even after being warned by the CAO of the activities of the Appellant on the suit rock.

Counsel submitted quite forcefully that this ground of appeal ought not to be allowed to stand, since it is argumentative and offends the provisions of Rule 66 (2) of the Judicature (Court of Appeal) Rules. Second, Counsel argued, the allegations and particulars of fraud pleaded in the counter claim do not include the complaint of fraud contained in this ground of appeal; hence, the Appellant should be barred from raising it on appeal. Counsel submitted that 25 30

the application clearly stated that the area applied for was situated in Lorengedwat Sub-County. He argued further that it is the coordinates accompanying the licences, rather than the name of the village stated, which is of importance; since it identifies the area covered by the licenses with unmistakable specificity.

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The learned trial judge erred in law and fact when she found and 5. ordered that the Appellant pays the monetary value of the quantity of aggregates procured from Kamusalaba rock.

Counsel submitted that upon the learned trial judge having found that the Appellant had mined granite rocks without the requisite 10 license to do so, and yet this is a mineral, it was consequential that the Appellant compensates the owner. As to whether the Government was the proper person to be compensated by the Appellant for the granite so exploited is the subject of a cross appeal hereto. 15

The learned trial judge erred in law and fact when she awarded the 6. Respondent half of the taxed bill of costs for alleged exposing a breach; yet the Respondent was suing the Appellant for its own gain.

Counsel referred to the provision of section 27 of the Civil Procedure Act; which is that costs follow the event. In the 20 circumstance of this case, Counsel submitted further, the trial judge allowed the suit only in part; hence, it was logical that costs awarded should reflect this partial success. Furthermore, Counsel argued, the Appellant never showed Court that the trial judge exercised her discretion non-judiciously. $25$

## **CROSS APPEAL**

In their written arguments in support of the cross-appeal, Counsel faulted the trial judge for making a finding that the Appellant's mining operations at Kamusalaba were not within the Respondent's

licensed area. Counsel attacked the learned judge's finding on two fronts. First was that this was an issue framed by the learned trial judge without it having either been pleaded, or brought up in evidence, or canvassed at the hearing. Second, was that the parties had, in fact, agreed in their pleadings that the Kamusalaba rock was within the Respondent's Iocation license. The adverse contention by the Appellant was that the Respondent had acquired the location licence fraudulently.

Counsel also submitted on the learned trial judge's finding that the Appellant had not infringed on the Respondent's mineral rights. He contended that had the trial judge found correctly that one of the Iicenses issued to the Respondent covered the suit rock, it was clear that she would have found that the Appellant had infringed on the Respondent's rights over the suit rock. On the trial Court's assessment of special damages, Counsel argued that if this Court finds, contrary to that of the trial judge, that there was infringement of the Respondent's rights over the rocks, then the special damages pleaded and proved by evidence should be awarded to the Respondent. 10 15

On the award of special damages, Counsel submitted that <sup>a</sup> professional witness made projections of the Respondent's intended granite mining operations over five years, and came up with gross sales of UGX 20,329,983,000/= (Twenty billion, three hundred twenty nine million, nine hundred eighty three thousand only). An official of the Uganda National Roads Authority gave evidence that in their contract with the Appellant, for the construction of the Moroto -Nakapiripirit road, the bill of quantities for crushed aggregates for road base, was UGX 23,995,130,000/= (Twenty three billion, nine hundred and ninety five million, one hundred and thirty thousand only). 20 30

L2

The evidence adduced by the Appeilant's Managing Director was that the aggregates they used for the construction of the Moroto - Nakapiripirit road, was obtained from the suit area. This is exactly the area for which the Respondent had the licence for exclusive exploitation of granite stones. The extraction of the granite stones from the area, by the Appellant, was thus an act of trespass and conversion to the detriment of the Respondent; and for which the Respondent is entitled to the recovery of the value of the goods so converted. The measure of compensation (damages) owing to the conversion would be the value of the goods at the time of their conversion by the Appellant.

With regard to the cross-appeal, Counsel for the Appellant/Cross\_ Respondent, for their part, submitted in reiteration of the arguments they had made in their submissions in support of the grounds of appeal; that the rocks excavated by the Appellant were not minerals, and further that the Respondent/Cross Appellant had no lawful authority over the rocks. counser supported the finding of the trial judge that the two licences, Nos. 1194 and 1r95, granted to the Respondent/Cross-Appellant were both for Atumtaok rock; which the Appellant,/Cross-Respondent never interfered with. Since there was no evidence that the Respondent/Cross\_Appellant had qny licence for Kamusalaba rock, which is the one in issue, it could not bve compensated by the Appellant/Cross\_Respondent for the rocks excavated from that rock. 15

## RESOLUTION BY COURT

This is a first circumstance the most notable one being Kifamunte Henry v (Jganda - Criminal Appear appeal to this Court. The duty has been stated and restated in of this Court in the a number of c ase s;

No. 10 of 2OO7, and Banco Arabe Espanol v Bank of uganda SCCA No. 8 of 1998. The Court held therein as follows:

"The first appellate Court has a duty to review the evidence of the case and to reconsider the materials before the trial judge. The appellate Court must then make up its own mind not disregarding the judgment appealed from but carefully weighing and considering it. when the question arises as to which witness should be believed rather than another and that question turns on manner and demeanour the appellate Court must be guided by the ': impressions made on the judge who saw the witnesses. However there may be other circumstances quite apart from manner and demeanour, which may, show whether a statement is credible or ttot tvl'ticlr n,ay wat'ratft a Lourt in dtferlng from the Judge even on a question of fact turning on credibility of witness which the <sup>15</sup> appellate Court has not seen. See pandva vs. R. (19 57) E. A. 336. and Okeno vs. Republic (1922) E. A. 32.

20 I will, in considering this appeal, abide by and take full cognizance of the principles enunciated in the authorities cited above. In my considered view, the determination of this appeal and the crossappeal thereto, really turns on the following questions. First, whether granite stone is a mineral. Second, the validity of the location licences granted to the Respondent/Cross-Appellant by the Commissioner for Geological Surveys and Mines. Then, third, whether either of these location licences covered the suit rock. The resolution of these questions would determine a number of grounds of the appeal and cross-appeal. 25

on whether granite stone is a mineral, as was found by the learned trial judge, Article 244 (S) provides that a mineral is:

"Any substance other than petroleum whether in solid, liquid or gaseous form occurring naturally in or on the earth formed by or subject to geological process."

The same Article follows: 244 (5) of the Constitution provides further as 5

"For purposes of this Articte, "mineral', does not include clay, murram, sand and or stone commonly used for buitding or similar purposes."

't0 15 This provision therefore qualifies the general definition of minerals stated above. It excludes certain substanccs from the definition of rninerals, even where they are either liquid or solid, or gaseous, in nature; and they have occurred naturally in or on the earth, formed by or subject to geological process, as is provided for in the general provision in the constitution on the definition of minerals, as is shown above. My own construction of the phrase ',commonly used for building or similar purposes" in the provision of the constitution above, is that it refers only to 'sand and or stone,.

The comma punctuation appearing immediately after the word "murram" has a disjunctive effect on the sentence. It sets apart 'sand and or stone'from the other substances listed before them; and for which there is no requirement to determine whether they are "commonly used for butlding or similar purposes,,, as they are automatically excluded from the definition of minerals. Had there been a comma appearing immediately after the word 'stone'as well,

25 it would have had therefore, it would a conjunctive effect on the sentence; and, have meant all the substances listed therein would only be excluded from the definition of minerals if they are "commonly used for building or similar purposes,,.

It is therefore only with regard to'sand and or sto,?e'that there is <sup>a</sup> requirement to establish first that such category of 'sand and or s.tone' are "commonly used for building or stmilar purposes", before they are excluded from the definition of minerals. Pursuant to the provision of the Constitution above, it would require evidence to show that a particular 'sand' or 'stone' is commonly used for building or similar purposes; and so is covered by the exclusion provision on the definition of minerals. However, Article 244 (6) of the Constitution mandates Parliament as follows:

"Parliament may regulate the exploitation of any substance excluded from the definition of minerals under this Article when exploited for commercial purposes." 10

To my understanding, this provision means the substances that are excluded from the definition of minerals, under the provision of the Constitution above, may nevertheless be classified by Parliament as minerals when they are exploited for commercial purposes. Pursuant to and in keeping with the provision of Article /S+ tOl of the Constitution above, Parliament enacted the Mining Act of 2003, which provides in section 2 thereof a distinction between building materials and industrial minerals. Building materials are listed therein. They are classified as building materials under the Act, when they are mined by a person from land owned or lawfully occupied by such person; and for such person's domestic use in Uganda for building' They are equally so glassified when they are mined by any person for his or her own use for road making. 15 20 25

Industrial minerals on the other hand, are also listed in the Act; and include granite. These fit the classification as mineral when iommercially mined by a person for use in Uganda or industrially

processed into finished or semi finished products. Some of these materials are noticeably classified under both building materials, and industrial minerals. These include rock, clay, gravel, laterite, sand, sandstone, and slate. Granite is, however, classified under industrial minerals only. with regard to the exploitation of granite from Kamusalaba rock also known as Nakumama rock by the Appellant for the construction of over 90 kms of road from Nakapiripirit to Moroto, this was certainly by any stretch of classification, a commercial exploitation of these granite stones.

10 15 20 Granite being a mineral under the Mining Act, 2003, its exploitation by anyone could only be lawful if carried out in compliance with the provisions of section4 (2) of the Act; which provides that such rnineral can only be so mined on the authority of a Iicense issued under the Act for that purpose. On the evidence, the Appellant exploited the rocks on the suit land on the permission granted by Nakapiripirit District Local Government. There is no law that mandates a Local Government to issue a license or permission to any person to prospect for, or mine, any mineral. That is the exclusive preserve of the Ministry of Energy. The authority purportedly given to the Appellant by the Nakapiripirit District Local Government was plainly illegal; and conferred no rights to the Appellant over the rocks from which it extracted the granite stones.

T

On the issue of the Iegality of the license issued to the Respondent to mine granite from the Kamusalaba (Nakumama) rock in issue, it is not in dispute that at the material time, the Respondent held two licences. In Julius vs oxford (Bp) (188o) 5 App Cas 214, at 229 - 230, Lord Penzance stated on lawfulness as follows:

"The words 'it shall be lawful' are distinctly words of permission only - they are enabling words. They confer a legislative right and power on the individual named to do a particular thing, and the true question is not whether they mean something different, but whether regard being had to the person so enabled - to the subiect matter, to the general obiective of the statute, and to the person or class of persons for whose benefit the power may be intended to have been conferred, to exercise it."

The location licences in issue were granted to the Respondent by the Commissioner for Geological Surveys in accordance with the provisions of section 54 of the Mining Act,2003; and were duly gazetted as required under section 93(4) of the Act. On the face of it, the Respondent held lawful licenses. These could only be impeached if it was proved to Court that the liccnccs werc procured by fraud as was alleged by the Appellant in the counter claim. The learned trial judge found that fraud was not proved; hence, the Iicences were lawfully acquired by the Respondent.

20 25 The particulars of fraud raised by the Appellant against the Respondent were basically two. First, was that Koriang Aparole, Luyok Pudale Raphael, Akol Charles, Lokeris Peter, lokongole Loyor, and Lukol Joseph - apparently directors in the Respondent - had falsely claimed that the suit land belonged to them under customary tenure. Second, was that the Respondent had acquired the license despite having been warned by the Local Government officials not to do so, and in spite of having had personal knowledge of the Appellant's activities on the suit land. The evidence on record however shows that the impugned licences were not granted to the Respondent basing upon any claim of ownership of customary title over the suit land.

The evidence on record is clear that the Respondent's application for a license was at first rejected as another person already held an exploratory license over the same area. The licences were later issued to the Respondent after the third party, M/s Rhino United Agencies Ltd, had relinquished their rights over the portion of their llcense covering the suit land, to the Respondent. The Respondent's root of interest in the land, therefore, traces back to that of M/s Rhino United Agencies Ltd; and therefore the claim, by the Appellant, of fraud by the Respondent in this regard is unfounded. In any case, any knowledge by thc Rcspondcnt, of the Appellant's activities on the suit land, before it acquired the licenses, could not operate as an inhibition to the acquisition of a license by the Respondent for the exploitation of the minerals in the suit land.

l'his is because the Appellant had no lawful authority to operate mining activities on the suit land. It was therefore a trespasser on the suit land; and its illegal mining of the granite mineral therein was illegal for offending the provisions of section 4 (2) of the Mining Act, which states that:

"No person may explore, or prospect for or retain or mine or dispose of any mineral in Uganda except and in accordance with a license i'ssued under this Act."

A person, such as the Appellant, who carries out a mining activity without a lawful license, commits an illegality. A Court of law cannot, and should never, condone and therefore be complicit to the promotion of an illegality. Accordingly then, the Appellant cannot be permitted to rely on or raise the illegality or unlawful activity on the suit land as a shield of protection against any person who acts or carries out any activity that is converse to the enjoyment of the illegal activity. To do otherwise, would in effect validate the illegality; and this would be most unfortunate. Following from the above, the learned trial judge was right to order 20 25

that the Appellant pays the monetary value of the quantity of the aggregates procured from the Kamusalaba rock. As to who should be compensated for the loss of the stones is the subject of a crossappeal herein; hence, I will advert to it shortly.

5 On the first ground of the cross-appeal, Counsel for the Cross-Appellant has faulted the learned trial judge for her finding that the license issued to the Respondent/Cross-Appellant did not cover the Kamusalaba rock; when this was not in dispute at all, either in the pleadings or evidence adduced at the trial. ln Interfreight Forwarders Limited vs East African Development Bank - SCCA No. 33 of 1992, Oder JSC 10

stated as follows:

"A party is expected and is bound to prove the case as alleged by him ans as covered in the issue framed. He wiII not be allowed to succeed on a case not set up by, him and be allowed qt the trial to change his case or set up a case inconsistent with what he alleged in his pleadings except by amendment."

In the instant case before this Court, it is evident from the record of the proceedings that Counsel for the Appellant/Cross-Respondent did concede that each of the two location licenses covered either of the two rocks exclusively. The persistent contention by the Appellant/Cross-Respondent was instead that the location license the Respondent,/Cross-Appellant held over the suit land had been fraudulently obtained. Having resolved this in the negative, the learned trial judge ought not to have made the Respondent/Cross-

Appellant's license over Kamusalaba rock an issue at all.

The learned trial judge's finding Ilespondent had not infringed on Re spondent,/Cro ss-Appellant, aro se evidence before her showed that that the Appellant,/Crossthe mlneral rights of the from her finding that the the license issued to the

Respondent/Cross-Appellant only covered Atamtaok rock; and yet the impugned activities of the Appellant/Cross-Respondent were on Kamusalaba rock. With respect to the learned trial judge, the evidence on record is quite clear that the two licenses each covered one of the two rocks. PW2 John Kennedy Okewling, an engineer in the Directorate of Geological Surveys and Mines, and the official in charge of Karamoja region, testified both in chief and in crossexamination that the area covered by the two licenses covered 32 hectares.

This area was split into two areas of 16 hectares for each license; and the 16 hectares are adjacent to each other. The split of the area into two is because, by law, location licence to prospect for granite must not exceed 16 hectares. DW6 Paul Lorukale testified that both Atumtaok rock and Kamusalaba also known as Nakumama rock are 10

in the same village within Lorengedwat Sub County; and that the two rocks are about two kilometers apart. DW9 Abednego Apuun a seventy years old resident of the area corroborated the evidence by DW3 that the two rocks are found in the same village. Had the Iearned trial judge properly evaluated this aspect of the evidence, she would have made a finding that each of the two rocks, Atumtaok and Kamusalaba, was covered by either of the two licences; hence, the Appellant,/Cross-Respondent infringed on the Respondent/Cross-Appellant's mineral rights. 15 20

On the assessment of special damages, the learned trial judge stated in her judgment that she would have awarded UGX 4,000,000,000/= (Four billion only) to the Respondent/Cross-Appellant as special damages had it been successful on this issue. In my view the learned trial judge failed to take into consideration the evidence of the scale of loss suffered by the Respondent/Cross-25

Appellant on account of the infringement by the Appellant/Cross-30

21,

Respondent. The evidence by Ronald Olaki, an official of the Uganda National Roads Authority which had contracted the Appellant/Cross-Respondent to construct the Moroto-Nakapiripirit road, and that of Henry Bwire a professional business consultant who projected the scale of the loss of a period of time, were so inslructive and useful.

The evidence by Ronald Olaki, basing on the bills of quantities in the contract between Uganda National Roads Authority and Appellant/Cross-Respondent, was that the costs of aggregate stones was UGX 23,995,130,000/= (twenty three billion, nine hundred ninety five million, one hundred and thirty thousand only). The professional projections by Henry Bwire put the loss at UGX 20,329,983,000/= (Twenty billion, three hundred twenty nine million, nine hundred eighty three thousand only). The evidence by Li Jincheng, the Project manager of the Appellant,/Cross-Respondent, was clear that the aggregate stones used in the construction of the Moroto-Nakapiripirit road was extracted from

the area Court has now established the Respondent/Cross-Appellant had the exclusive to mine granite from.

This was an action founded on the torts of trespass and conversion. On the authority of Musoke vs Departed Asians Property Custodian Board & Anor. SCCA NO. 1 of 1992 [1990-1994] EALR 419, the measure of damages for this tort of conversion has to be the value of the properties converted at the time of the conversion. As is shown in the bills of quantities put in evidence by the official of the Uganda 20

- National Roads Authority, Since the value of the granites converted b'y the Appellant/Cross-Respondent was UGX 23, 995,130,000/= (twenty three billion, nine hundrcd ninety five million, one hundred and thirty thousand only) at the time of conversion. This is the sum the trespasser has to pay for the conversion of the minerals. - 30

The learned trial judge ordered that the Appellant should effect the decreed payments to the Government. Having found that the Respondent held a lawful licence over the rocks exploited by the Appellant, and it was the Respondent's mineral rights that the Appellant infringed upon, it is to the Respondent that the payments ordered by Court has to be made. The government of Uganda is only entitled to such payments of taxes and royalties over minerals for which it has granted licences to a prospector. Had there been no licence granted to any person over the suit area, the Government would then have rightly been entitled to the compensation for the value of the minerals so wrongfully exploited.

On the issue of costs, which was a ground of appeal, it is trite that the award of costs is a discretionary function of Court; but, as has now heen settled, that discretion must be judiciously exercised, and reasons given for the award made. In the instant case, the learned trial judge awarded half of the costs to the Respondent. Since this was based on the fact that the Respondent had succecded only in part, I cannot say that the learned trial judge exercised the discretion in the circumstances on wrong principles, or that it was not based on good reason. However, having found that the learned trial judge was wrong in disallowing the claims by the Respondent, which led her to award partial costs, but the Respondent has succeeded on all of its claims in this Court, I would overturn the lower Court's award of costs to reflect the true outcome of the case. 15 20

- In sum therefore, the appeal fails; and I would dismiss it with costs. On the other hand, I would allow the cross-appeal with costs. In the event, I would make the following declarations orders: 25 - i. The appeal is dismissed with costs here and in the Court below.

- The cross-appeal is allowed with costs. 2. - The Appellant infringed on the Respondent's mining interest 3. in the Kamusalaba rock. - The Appellant shall compensate the Respondent in the sum of $4.$ UGX 23, 995,130,000/= (twenty three billion, nine hundred $\mathsf{S}$ ninety five million, one hundred and thirty thousand only) being the value of granite stones it wrongfully exploited from the Kamusalaba rock. - A permanent injunction hereby issues restraining the 5. Appellant by itself or through any person claiming under it from interfering with the Respondent's mining right in the Kamusalaba/Nakumama rock.

Since both Cheborion and Tuhaise JJ. A agree, orders are hereby made in the terms proposed above.

Dated at Kampala this $\Delta$ day of $\Delta$ 2019 15

Clini, $\mathscr{A}$

Alfonse C. Owiny - Dollo DEPUTY CHIEF JUSTICE

# THE REPUBLIC OF UGANDA

# IN THE COURT OF APPEAL OF UGANDA AT KAMPALA CIVIL APPEAL No. 52 OF 2017

(Appeal from the judgment of Wolayo J, in High Court (at Soroti) Civil Suit No. 16 of 2014)

[CORAM: OWINY - DOLLO, DCJ; CHEBORION BARISHAKI & TUHAISE, JJ. A.]

CHINA ROAD & BRIDGE CORPORATION ....................................

#### **VERSUS**

WELT MACHINENEN ENGINEERING LTD. ..................................

### Judgment of Cheborion Barishaki JA.

I have had the benefit of reading in draft the Judgment prepared by the learned Deputy Chief Justice Owiny – Dollo DCJ. and I agree with him that this appeal should fail. I also agree that the Cross appeal has merit and should succeed. Clearly the appellant infringed on the respondent's mining interest in the impugned rock.

I concur that the appeal should be dismissed and the cross appeal succeeds with costs to the successful party.

Dated at Kampala this $\mathbb{R}^{S^+}$ day of ... $\n *Three*<sub>2019</sub>\n$

Cheborion Barishaki

**Justice of Appeal**

### THE REPUBLIC OF UGANDA

$\cdot \colon \hat{\bullet}$

## THE COURT OF APPEAL OF UGANDA AT KAMPALA

[*Coram: Alfonse Owiny-Dollo, DCJ, Barishaki Cheborion & Percy Night Tuhaise, IJA]*

CIVIL APPEAL NO. 52 OF 2017

**China Road And Bridge Corporation ....................................** Versus

**Welt Machinen Engineering Ltd ...................................**

[*Appeal arising from the judgment of the High Court at Soroti (Hon. Lady Justice H. Wolayo) delivered on* $14$ <sup>th</sup> *April* 2016]

# **Judgment of Percy Night Tuhaise, JA**

I have had the benefit of reading in draft the judgment of Hon. Mr. Justice Alfonse Owiny-Dollo, DCJ. I agree with his analysis of evidence, decision and conclusion that this appeal be dismissed with costs here and in the Court below, also that the cross appeal be allowed with costs. I also agree with all other orders set out in his judgment.

Signed and dated at Kampala this $\mathbb{R}^3$ day of $\mathbb{R}^3$ . 2019.

Vanchaise

**Percy Night Tuhaise Justice of Appeal**